Endowment Shortfall:how best to use my savings ?

snapyou

I have four years left on my interest only mortgage with the Halifax.
There is going to be a potential shortfall of £9000.
I would like to keep my endowment going.
I have approximatey £3000 in savings.
Should I pay this £3000 into my mortgage or would i be better putting it into an Isa or some other form of saving.
Thanks in advance

EdInvestor

snapyou wrote: »

I would like to keep my endowment going.

May I ask why?

snapyou

EdInvestor wrote: »

May I ask why?

Well,if I cash it in now I'd get around £13,000.
In four years time,looks like it should be around £19,000

But my main question is what to do with my savings:are they better off in a savings account/ISA OR putting into the mortgage now?

dunstonh

In four years time,looks like it should be around £19,000

How do you know?

I assume you are using the projections. However, are the projections realistic or not and if with profits, do they include terminal bonus or any mortgage promise value (limited number of providers)? Projections are notoriously unreliable and can easily overstate the likely return as well as understate. What you tend to find is the bad ones overstate and the good ones understate which leads to many people holding on to duff endowments whilst others get rid of perfectly good ones.

But my main question is what to do with my savings:are they better off in a savings account/ISA OR putting into the mortgage now?

What type of ISA? A stocks and shares ISA maybe if you accept the risk. A cash ISA maybe if the rate is better than the mortgage.

snapyou

dunstonh wrote: »

How do you know?

I assume you are using the projections. However, are the projections realistic or not and if with profits, do they include terminal bonus or any mortgage promise value (limited number of providers)? Projections are notoriously unreliable and can easily overstate the likely return as well as understate. What you tend to find is the bad ones overstate and the good ones understate which leads to many people holding on to duff endowments whilst others get rid of perfectly good ones.



What type of ISA? A stocks and shares ISA maybe if you accept the risk. A cash ISA maybe if the rate is better than the mortgage.

Thanks for your reply.
The projected amount as of today at 3.5% was £16,000 and at 5.25%,£17,200.
My 2006 bonus declaration arrived today and my total bonus to 12/06 was £5414.72

Should i be concerned that I won;t get up to the £16-£17,000 ?

Thanks again

dunstonh

Should i be concerned that I won;t get up to the £16-£17,000 ?

Yes. Who is the provider? The ones that use projection rates lower than the FSA standard tend to be the poor ones. Some of them arent even paying a penny. However, there are some good ones that also use lower rates so its not a hard and fast rule.

snapyou

dunstonh wrote: »

Yes. Who is the provider? The ones that use projection rates lower than the FSA standard tend to be the poor ones. Some of them arent even paying a penny. .

Thanks again for your prompt reply.
I am with Phoenix,formerly Sun Alliance.
I am a bit confused as to why when i spoke to them today they said the projected final amount would be £16-17,000
when my 2006 Bonus Declaration received today is £5414.72
Does this really mean that the projected final amounts(already providing a shortfall of almost a third,my endowment was for £26,000)could be MUCH lower?
I don't really understand the bonuses at all.What are they?
The amount on which Bonus Is Calculated is £8580:why that amount and not £26,000?
REALLY worried ANd confused now.
Hope to hear from you

dunstonh

I am a bit confused as to why when i spoke to them today they said the projected final amount would be £16-17,000

Doesnt mean it will be. They are using the projection rates they have chosen to use. They are just examples and not guaranteed. You could get back more or less than those.

Phoenix plans are amongst some of the worst plans out there and a good guide is to work on a projection rate of zero to 3%.

snapyou

dunstonh wrote: »

.

Thanks again,so my bonus is added to my basic sum assured(£ 8580)?

I realise that Phoenix are pretty awful.
My 2005 Bonus Declaration Total for 2005 was £5400.74
My 2006 Bonus Declaration Total for 2005 was £5414.72

So,over a year, a grand total of £13.98 !
Is that normal?


Will my Final Bonus be up to much?
Here's what they say in their Final Bonuses info:
"Years since Issue : 10..................0%
15.................0%
20.................11%"

Does this mean,that at the moment,i could expect another 11% on top of my final amount?

Thanks for all your help

EdInvestor

Hi snapyou.

Very likely you should surrender this endowment and use the money to reduce your mortgage, also increasing the mortgage payments by the endowment premium.

But post some figures so we can check.

Guaranteed sum assured
Declared bonuses
Surrender value
Maturity date
maturity projections
Monthly premium
Interest rate payable on mortgage

snapyou

EdInvestor wrote: »

Hi snapyou.

Very likely you should surrender this endowment and use the money to reduce your mortgage, also increasing the mortgage payments by the endowment premium.

Here are those figures you asked for :

Guaranteed sum assured : £8580
Declared bonuses :£5414.72
Surrender value £ 12,840
Maturity date 14/11/2011
maturity projections @ 3.5%=16,000
@ 5% = 17,200
Monthly premium £32.12
Interest rate payable on mortgage : SVR

Thanks again:MUCH appreciated!